Trump sets steel and aluminium tariffs

Donald Trump's imposition tariffs on steel and aluminium could hurt the financial market.

US President Donald Trump has pressed ahead with import tariffs of 25 per cent on steel and 10 per cent for aluminium but exempted Canada and Mexico and offered the possibility of excluding other allies.

Describing the dumping of steel and aluminium in the US market as "an assault on our country", Trump said that the best outcome would be for companies to move their plants to the US.

He insisted that domestic metals production was vital to national security.

Plans for the tariffs, set to start in 15 days, have stirred opposition from business leaders and prominent members of Trump's own Republican Party, who fear the duties could spark retaliation from other countries and hurt the US economy.

Within minutes of the announcement, US Republican Senator Jeff Flake, a Trump critic, said he would introduce a bill to nullify the tariffs. Republican Orrin Hatch, who chairs the Senate Finance Committee, said he would work with the White House to "mitigate the damage".

Trump's unexpected announcement of the tariffs last week roiled stock markets as it raised the prospect of an escalating global trade war. But he appeared to have backtracked from an earlier "no-exceptions" stance after a campaign by politicians, industry groups and US allies abroad.

Canada, the US' largest supplier of both steel and aluminium, welcomed the news it would not immediately be subject to the tariffs, but vowed to keep lobbying Washington until the threat of duties disappeared.

Trump also offered relief to countries that "treat us fairly on trade," a gesture aimed at putting pressure on Canada and Mexico to give ground in separate talks on renegotiating North American Free Trade Agreement.

US steel stocks, which have gained for weeks on anticipation of the tariffs, fell after the announcement, with the S&P composite steel index ending down 2.53 per cent.

The Canadian dollar and Mexican peso gained slightly against the US dollar.

A senior Trump administration official said other countries could seek talks with US Trade Representative Robert Lighthizer to find "alternative ways" to mitigate the threat to US national security posed by their steel and aluminium exports.

It was unclear whether they would involve quotas or voluntary export restraints.

Several major trading partners have said they might respond to the tariffs with direct action.

Countermeasures could include European Union tariffs on US oranges, tobacco and bourbon. Harley-Davidson motorcycles have also been mentioned.

Even as Trump threatened tariffs and prodded his NAFTA partners, 11 nations gathered in Chile to sign a landmark Asia-Pacific trade pact, one that Trump withdrew from on his first day in office.

Beijing, which until now had kept largely silent on the issue, sharpened its rhetoric significantly. One lever that China has is US agricultural exports and it has said in the past that it could target soybeans.

China had a record $375.2 billion goods surplus with the United States last year.

Trade tensions between the world's two largest economies have risen since Trump took office last year, and although China accounts for only a small fraction of US steel imports, its massive industrial expansion has helped create a global glut of steel that has driven down prices.